Looking To Workday's Q2 Earnings Release, Baird Thinks Competition Concerns Are Overblown

Workday Inc WDAY will release its second-quarter results after the close on August 24, and Baird said competition concerns are overblown as its checks suggest a stable demand environment.

The brokerage expects a loss of $0.05 a share, billings of $420.05 million and revenue of $372.5 million versus consensus estimates of $0.02 loss per share, billings of $421 million and revenue of $373 million.

"We think concerns about the competitive environment are somewhat overblown given the singular focus on increased price discounting while overlooking the potential increase number of transactions in play," analyst Steven Ashley wrote in a note.

Related Link: Needham Previews Workday's Q2, Downgrades To Hold

Ashley, who has an Outperform rating and $85 target price on the stock, said the majority of channel partners say a company running Workday HCM had competitive advantage over direct competitors running legacy HCM systems. Also, the majority of partners believe it is easier to implement Workday than Oracle Corporation ORCL's Fusion.

The brokerage said most partners felt they would not be surprised to see Workday land a marquee of financials customers in the next six months.

At time of writing, Workday was trading at $80.04, up 1 percent on the day. Based on Monday's close, the price target of $85 represents a potential return of 7 percent.

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